Landlord News

Landlords struggling to obtain BTL finance

Em Morley - August 17, 2015

A new investigation suggests that a lack of buy-to-let finance is proving a stumbling block to more than 10% of UK landlords. This comes despite the fact there are over 900 buy-to-let mortgages available on the current market.

The survey conducted by online agent Property Let By Us shows that the inability to get finance is preventing many landlords from expanding their portfolios.


Data from the report indicates that one in ten landlords had difficulty in securing a buy-to-let mortgage over the last year. However, 82% of landlords have had success in obtaining a mortgage over the same period.

Alarmingly, the survey suggests that nearly 80% of landlords have reported rent arrears, with nearly a quarter serving an eviction notice, with 7% of disputes ending up in court. More positively, void periods have decreased as demand continues to accelerate.[1]

‘While the booming buy to let market looks like good news for landlords, the real picture is not so rosy,’ observed Jane Morris, Managing Director of Property Let By Us. ‘Spiralling rents are great news for yields, but the down side is that it brings with it a higher risk of rent arrears,’ she continued.[1]

Morris went on to say that, ‘securing finance also looks like it is going to get tougher for landlords. A new high street crackdown now means landlords will need a bigger deposit and face tighter checks for a buy to let loan. High street lenders are introducing strict criteria in a crackdown on the buy to let boom, which is feared to be pushing up house prices across the UK.’[1]

Landlords struggling to obtain BTL finance

Landlords struggling to obtain BTL finance


In addition, Morris feels that, ‘the amount landlords will be able to borrow is expected to fall by thousands and they are likely to face new tough lending criteria to secure a buy to let loan. Landlords must also prove that they are not wholly reliant on their rental income and that they will also be able to cope with void periods and any repairs to the property.’[1]

Many lenders are introducing new affordability checks, which see landlords having to answer tough questions on how much they spend on household bills and features such as childcare, before they get a loan. Some lenders also refuse loans to people dependent solely on a rental income, with some expecting applicants to have an income of at least £25,000 a year from other sources.

Concluding, Morris said that, ‘landlords need to thoroughly research lenders and ensure they meet the lending criteria before applying for a mortgage.’[1]